The Irony of It

I’ve been saying for decades that scandal of the first part of the 21st century would be the default of corporate pension plans. I still hold to that prediction and today the Wall Street Journal maps out a particularly infuriating mechanism by which my prediction might very well come to pass:

At a time when scores of companies are freezing pensions for their workers, some are quietly converting their pension plans into resources to finance their executives’ retirement benefits and pay.

In recent years, companies from Intel Corp. to CenturyTel Inc. collectively have moved hundreds of millions of dollars of obligations for executive benefits into rank-and-file pension plans. This lets companies capture tax breaks intended for pensions of regular workers and use them to pay for executives’ supplemental benefits and compensation.

Ah, but have no fear! The PBGC AKA taxpayers will pick up the tab when companies default raising the supreme irony that not only will people without pensions be paying the pensions of people who do but that people without pensions will be paying the pensions of people who do whose pension plans were raided to pay the excessive retirement benefits packages of top management.

1 comment… add one
  • Andy Link

    My father-in-law is a steelworker. His company went under about 4 months after he retired after 30 years employment. It turns out that there wasn’t much in the company pension accounts, which went insolvent about six months after that. His pension was picked up by PBGC, but he receives about 1/2 what his expected pension would have been.

    A few months later, someone else bought the foundry and my FIL has been back at work ever since. At least he’s kept his seniority. I’m sure it’s probably no surprise to you, but the new company is just as productive but utilizes about 1/2 the workforce, nor is it is a surprise that the CEO of the old company got millions even though he ran the company into the ground.

    If there’s one thing I’ve learned is that I will depend on no one or no institution but me and my family (meaning the wife) for my retirement.

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